Hints that North Korea is seeking a thaw in the ice

North and South Korea shook hands last Wednesday, agreeing to end a 133-day suspension of the joint Gaeseong Industrial Complex. The North has promised unfettered operations at Gaeseong, but whether this compromise means the coming of a North Korea that is more trustworthy and open to economic development remains unclear, despite hopeful reports.

Hints that Pyongyang's ruling elites were vying for more butter and fewer guns rose sporadically in the months prior to the Gaeseong deal.

On Saturday, Kim Jong-un visited a ski resort under construction at the Masik mountain pass, near the highway linking Pyongyang and Wonsan. North Korean officials claim the resort could raise up to US$62.5 million annually by inviting more foreign tourists and holding international competitions, although external analysts say the numbers are exaggerated.

Reports of a behind-the-scenes meeting between North Korean officials and American academics in Geneva earlier this month, the wide use of US dollars and Chinese yuan within North Korea, and the release of an indigenous smartphone called the Arirang reinforce the notion that the North is hungry for foreign investment and eager to open up.

"Market socialism is the key word for Kim Jong-un. His grandfather's system was industrial socialism, whereas his father's was military socialism. Kim Jong-un is trying to bring more money into his country," said An Chan-il, a North Korea expert at Seoul's Chung-Ang University.

South Korea took advantage of the North's peace gestures, with President Park Geun-hye last Thursday proposing reunions for separated families and a potential peace park in the demilitarised zone.

But some observers insist there has been no sign of fundamental change in North Korea's external policies.

"The North is not being swayed by external pressure. I predict that the North has a detailed playbook that it is following to get what it's after," said Choi Gang, deputy chief of the Seoul-based Asan Institute for Policy Studies.

The "fundamental strategic dynamics of the Korean Peninsula, in which North Korea is able to successfully bring tensions to the brink of crisis secure in the belief that, ultimately, Seoul is more risk averse than Pyongyang and is less willing to accept significant physical or economic damage" remains unchanged", said Ken E Gause of the US government-sponsored think tank CNA Strategic Studies Division.

A US institute announced on August 7 that North Korea now had the capability to build four nuclear bombs per year according to satellite images, while US chair of the Joint Chief of Staffs, General Martin E Dempsey, said in May that the North's neighbours were "no longer in a period of cyclical provocations" but "a period of prolonged provocations".

North Korea has a history of initiating hopes for a new era of peace and economic reform, before scrapping agreements through military provocations or nuclear tests. In February 2012, North Korea and the US agreed the North would suspend it missile testing and nuclear programme while the US would give food aid. The deal raised hopes not least because the Swiss-educated Kim Jong-un seemed to stand for a more open and improved North Korea.

Only two months later, in April 2012, the North fired a rocket into nearby seas, effectively nullifying the deal and any hope that the new leader was going to usher in a new era. A December 2012 rocket launch, February 2013 nuclear test, and the charged threats in April of nuclear war against the South and US did nothing to improve the mood.

Even China backed away from its traditional ally, with its endorsement of UN sanctions and snubbing of North Korean envoys to Beijing earlier this year. According to diplomatic sources in Seoul, Beijing's trade with Pyongyang decreased by 6 per cent in the first half of 2013 compared to the same period in 2012, from US$3.14 billion to $2.95 billion. The Bank of China had already severed deals with North Korea's Foreign Trade Bank in May, signalling China's stronger commitment to UN sanctions against the North.

Perhaps there remains hope, however. "The North already knows war is not an option," said An. "They understand they cannot win a conventional, protracted war against the combined forces of the South and the US."

"What they do know is that whatever lies ahead, they need money," he added.